| By: |
Abdul Rahim, Mohamad Syafiqe |
| Abstract: |
The Islamic Financial Services Act 2013 (IFSA) came into force on 30 June 2013
with the objective to pave way for the development of an end-to-end Shariah
compliant regulatory framework for the conduct of Islamic financial operation
in Malaysia. A key concern among Islamic banks is regarding the
reclassification and requirements in differentiating between Islamic deposit
and investment account. IFSA has introduced two major classifications of
products for the acceptance of money from customers by the Islamic banks,
namely Islamic deposits and investment accounts. This paper retrospectively
analyses the development of Islamic deposit products following the enforcement
of the IFSA. This paper explores the industry's response to these requirements
and outlines the prevailing structures of Islamic deposit products used by
Malaysian Islamic banks. It also assesses the impact of IFSA regulations on
these structures. This study is based on qualitative research approach which
is purely based on primary data gathered through library research and
interview. The paper highlights that, while the reclassification requirement
under IFSA 2013 necessitates additional efforts from Islamic banks, it aligns
Islamic banking more closely with the objective of underlying Shariah contract
(maqasid al-aqd). This initiative, though still in its early stages,
represents a departure from conventional banking practices and emphasizes the
significance of ijtihad in the development of novel financial products. |
| Keywords: |
Islamic Financial Services Act, Transition, Islamic Deposit, Investment Account, Shariah contract |
| JEL: |
G21 K1 K10 K20 |
| Date: |
2025–01–15 |
| URL: |
https://d.repec.org/n?u=RePEc:pra:mprapa:123343 |